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Innovation Desire Drives Dell Buyout

The Leveraged Buyout (LBO) for Dell is meeting skepticism from analysts. Some in the market don’t believe that it will help Dell’s fundamental position enough to help the company. But that is exactly the reason why Dell will be bolstered by going private, Michael Dell will go back to his scrappy roots with a long view.

Look at Amazon — the naysayers think Amazon is over-valued, but that negativity is partly driven by analysts dislike of Jeff Bezos‘ long term thinking and the investor community penalizes the stock for it. But their strategy is brilliant and they keep proving that they understand the consumer and know how to serve people.

Dell used to do that exceptionally well and still does, actually. I own a Dell Latitude laptop that works great, but when it needed service, a tech was out to my office in record time. Going private will help them refocus on the customer.

No doubt, the market has changed, but Dell wants to shift to meet that market. They don’t intend to go after their old fundamentals, which is where you hear many analysts criticizing them. “Going private won’t help the company’s fundamental position…” True, it won’t, but they don’t intend to stay in that spot. It is too easy for us to lock on to past performance or position.

Look at the acquisitions that Dell has been making to get an idea where Michael Dell intends to go. Look at the research and development work. Look at the Innovation center they created or the Entrepreneur-in-Residence (EIR) program they developed that includes the Dell Innovators Credit Fund to help young companies. Look at Microsoft stating they will likely participate in the LBO.

Michael Dell shook up the PC market years ago, not that many, either, and can do it again in the cloud, with enterprise servers, and probably some great desktop, laptops, and tablets for the smaller business markets.

Today Dell Quest Software announced the results of a global survey of IT executives to gauge the level of organizational maturity with existing Bring Your Own Device (BYOD) strategies, along with realized and anticipated benefits and problems. The findings conclude that approximately 70% of companies believe BYOD can improve their work processes and help them work better in the future, while an estimated 59% believe they would be at a competitive disadvantage without BYOD.

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I have a Dell Laptop which is 1 1/2 years old. The problems with this Laptop started the first week I opened the box. I was immediately sent to India for a “service technician” who first reminded me that I must first “buy” a software and a hardware agreement. I was quite surprised. They have never been able to get this Laptop to work for more than a month or two. They have treated me rude, crude and kept me on the phone for up to 3 hours. I “begged” for my money back but they would never let me speak to a US representative. They advised it would “cost more”.

dell (as in michael) has been floundering for years–the move into tvs and smartphones, the decision to buy the sort of services provider that led hp to write down eds’ value by about two-thirds. . . . why should going private make any difference?

Hello Paul, I can see your perspective. My belief is that Dell, including Michael, has innovation in its genes. It isn’t so long ago that they disrupted an industry. I believe they can do it again, but the public markets can be unforgiving of the long view (per my Amazon thoughts) and going private gives them more room to maneuver. For the record, my “Long” position is only a tiny number of shares so I really do not have much to gain by their stock going up.